Segregation of duties is one of the most important aspects of internal control. For effective implementation of internal control, segregation of duty is essential. It helps enable establish responsibility among the employees as well as keeping a control on their activities. Tom Tuffnut can distribute the given tasks among the three employees in such a manner that no one person can complete the tasks on his own, each task should be so assigned that more than one person is required to successfully finish it. The critical functions of an organization are dispersed among different people. It helps prevent unilateral actions and reduces the possibility of tolerance or fraud.
Clerk 1:
For the segregation of duties, Tom Tuffnut should assign the task of opening of mail and listing of cash receipts, preparing checks for signatures and responsibility of petty cash fund. This will ensure that the cash receipts are properly recorded, and the petty cash is not misappropriated. The receipts of cash should be recorded and set aside in a separate account while petty cash fund should be maintained and recorded for any differences on a regular basis. The checks prepared for signatures will not be misused due to the fact that the bank reconciliation statements are prepared by another clerk. This will ensure that the checks prepared are in co-ordination with the bank statements.
Clerk 2:
Another clerk should be assigned the task of depositing cash receipts in a bank as well as maintaining cash disbursement journal. This will ensure that the cash receipts are not misappropriated and are regularly deposited to the bank account. The cash disbursement journal is for the disbursement of cash from the cash account. These two are separate duties and cannot be misappropriated by any clerk. The listing of cash receipts is done by another clerk who will avoid any misallocation of the cash receipts. The clerk assigned to deposit the amount will not be able to misuse the funds because the listing of cash receipts is already done by another clerk, and the reconciliation of bank statements is prepared by another one.
Clerk 3:
The third clerk should be assigned the duty of maintaining accounts receivable sundry records, determining which accounts receivable are uncollectible and reconciling bank statements. Accounts receivable is maintained by this clerk who will get to know of the amount received from another clerk. Reconciliation of bank statements should be assigned to the clerk who is not handling any cash or bank transactions. Hence, this clerk will only be aware of accounts receivable records and not about the cash receipts or disbursements. He will prepare a reconciliation of bank statements without any knowledge of the work or other two accountants.
Segregating the work amount the three accountants in the above manner will lead to efficient and effective internal control. The tasks will be performed with efficiency, and there will not be any misappropriation of funds. To ensure maximum capacity utilization of the employee’s efficiency as well as balance the work load of the accountants, segregation of duty can provide maximum results. Tom Tuffnut should distribute the tasks in a given manner and ensure that they are properly communicated to each; the responsibility of the tasks should be clearly assigned. No overlapping of the tasks should be done by any of the accountants. All three accountants should be responsible for the work assigned to them.
Works Cited
Ghosn, Anthony. Segregation of duties. 2013. <http://www.aicpa.org/interestareas/informationtechnology/community/pages/value%20and%20strategy%20through%20segregation%20of%20duties.aspx>.
